Adapting to Challenges in the Automotive Industry
A few years ago, I received a fascinating piece of history from a friend in the USA—the 1939 General Motors Retail Sales Management manual. It was an enlightening read, not because it offered something new, but because it highlighted how little has changed in our industry. The challenges and topics discussed in that manual are eerily similar to the issues we still face today.
This raises a critical question: If training drives improvement, why do we continue to grapple with the same problems? A quick glance at today’s training materials and manuals shows that we’re still addressing the same issues—sales conversions, service retention, and staff turnover.
Why hasn’t significant progress been made? Is the real problem being identified, or are we just treating symptoms? Are our efforts to drive improvement focused on the right areas?
Consider this:
In the movie Moneyball, the management team faces a similar dilemma. As they strategize for the next season, Billy Beane, the team’s GM, interrupts the discussion with a pointed observation: “You’re just talking, la la la la la, like this is business as usual.”
The scouts and management claim they are solving problems, but Billy challenges them, insisting they aren’t even looking at the real problem. This scene resonates deeply with my experience in the automotive industry, where meetings often revolve around well-trodden discussions that fail to address the root cause of our challenges.
Early in my career with an OEM, I encountered a significant cost issue. The pre-delivery costs for new vehicles were alarmingly high. Initially, I followed the established processes, assuming they were standard. However, I soon realized that something was amiss. Was the issue with the product, the process, the people, or a combination of all three?
Through methodical research, I discovered the vehicles were not the problem. Instead, the approval process was the culprit. Implementing a new structure, despite initial resistance, resulted in a 36% cost reduction, faster processing times, and no negative impact on quality. This success was not because of any extraordinary insight, but a willingness to challenge preconceived notions and objectively identify the real problem.
The story of Kodak serves as a powerful reminder of the dangers of failing to adapt. Despite inventing the first digital camera in 1975, Kodak’s management dismissed it, fearing it would cannibalize their lucrative film business. This shortsightedness led to Kodak’s downfall, culminating in their bankruptcy in 2012.
In the automotive industry, we face our own challenges:
Dealerships and OEMs have had to adapt to these changes or risk obsolescence. Those who have been quick to embrace these shifts are now leading the market, while others who hesitated are struggling to keep up.
For instance, when I was with Hyundai, we introduced drive-away pricing under the leadership of the late CK Liew. Initially met with resistance, this transparent pricing model quickly became a customer favorite and is since adopted industry-wide in Australia.
Similarly, the Hayne Royal Commission’s compliance changes forced dealerships to adapt their F&I operations. Those who embraced these changes early are now thriving, while others who delayed are still struggling to optimize this crucial aspect of their business.
In my current role as a Director at Op2ma, the need for continuous adaptation is more critical than ever. Our consulting team must stay ahead of industry trends, products, and compliance requirements, while our IT department is constantly innovating to keep our solutions cutting-edge. This relentless pursuit of improvement ensures that we meet our clients’ needs in an industry that is evolving faster than ever.
The automotive industry is no longer “business as usual”. To win, we must look beyond traditional practices, identify genuine problems, and adapt swiftly. As the industry continues to transform, those who fail to evolve will find themselves left behind.
Stay Ahead in the Automotive Industry—Adapt and Thrive
Are you ready to tackle the real challenges in your dealership and lead with innovative strategies? Contact us today for a no-obligation discussion on how we can help you identify core issues and adapt to the ever-changing automotive landscape. Don’t get left behind—partner with us to turn challenges into opportunities for success.